How to Establish Good Credit

By Ken Brossman, District Manager – La Crosse, Marine Credit Union

It is important to establish good credit from the start so that you do not dig a hole that is difficult to get out of. There are many ways to create that kind of credit right off the bat. Here are just a few, easy tips to get you started on the right track:

  1. Make sure to always make your payments on time. A late payment on even a small bill can really set you back when trying to establish good credit.
  2. Take out installment debt instead of revolving debt when possible. Installment debt is a loan where the borrower has fixed payments for a fixed number of months. With revolving debt, a credit card for example, the balance increases as you spend and decreases as you pay it off. It rotates like a revolving door.
  3. Use revolving credit periodically for small purchases to keep them active. If possible, always pay them off monthly to avoid paying interest. Set a standard to only use your credit card for groceries or gas. Larger purchases can be paid by taking out a loan or through savings.
  4. Only borrow what you can reasonably afford to pay back. Work with your lender at your financial institution to analyze your income and other debt to identify an affordable amount.
  5. Use certificate of deposit or savings secured loans to help establish credit. These loans are a great way to establish good credit at a very reasonable rate.

Want to learn about more ways to build your credit score, read the article below.

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